Two large banks have turned up the heat on Nasdaq’s Bob Greifeld — and the exchange boss may be beginning to melt.
The exchange CEO, while standing firmly behind a $62 million remuneration plan tied to Nasdaq’s mishandling of the May 17 Facebook initial public offering, may be sweating regulatory approval of his plan and might blink.
“I think that [Greifeld] believes that this [compensation plan] is going to be a jump ball as to whether the SEC [Securities and Exchange Commission] approves it,” said one source following the dispute.
As a result, Greifeld may be weighing a move to raise his offer, sources said.
Greifeld’s possible jitters come three months after Nasdaq bungled Facebook’s initial public offering and hours after two large banks, UBS and Citigroup, ripped his $62 million plan to help firms recover losses from the fiasco.
“The proposed accommodation policy unfairly sets a monetary cap that is vastly disproportionate to reported trading losses resulting from the Facebook IPO,” wrote UBS general counsel Mark Shelton in a comment letter to the SEC.
Serving as a market maker for thousands of would-be institutional buyers of Facebook shares on May 18, UBS said that it racked up a whopping $350 million in losses from Nasdaq’s errors.
UBS is threatening to sue the exchange.
The Swiss bank and others had until Aug. 21 to comment on Nasdaq’s plan.
“UBS alone suffered losses in excess of $350 million, the vast majority of which resulted directly from Nasdaq’s unprecedented failure to deliver execution reports for tens of thousands of trade,” Shelton wrote.
UBS was joined in ripping Greifeld’s sweetened offer by Citigroup. Both companies urged the SEC to block the Nasdaq plan.
At first, Greifeld offered just $40 million. The SEC has until Sept. 14 to weigh in on the plan.
Greifeld has described the sweetened offer as the “definitive” plan that would satisfy the majority of traders.
It would cover losses by a market-making arm of Citadel Investment Group and Knight Capital. Citadel has expressed its support of the plan, as has Knight Capital.
The dispute over the Facebook package comes as Wall Street’s trust in electronic trading platforms is at an all-time low and volumes are petering.
One thing going for Greifeld is that at least some of the heat may have been taken off Nasdaq when one of its toughest critics, Knight Capital CEO Tom Joyce, suffered a technical glitch that put his trading firm on the brink of collapse just weeks ago.